The invention relates to the technical field of yellow phosphorus production equipment and particularly relates to a free combination and transportation type phosphorus sludge settlement treatment recycling device and a recycling method thereof. The free combination and transportation type phosphorus sludge settlement treatment recycling device comprises at least one bracket and at least one settlement groove arranged on the bracket, wherein the settlement grooves are connected in series through a pipeline. According to the free combination and transportation type phosphorus sludge settlement treatment recycling device provided by the invention, the device adopts a goods shelf type structure design so that the occupied area is small and a phosphorus sludge settlement effect is good; a single phosphorus sludge settlement groove can be wholly moved out for treatment, so that dangers caused in a phosphorus sludge transportation process are avoided; meanwhile, the plurality of phosphorus sludge settlement grooves are arranged and are freely detached and combined; the phosphorus sludge settlement grooves are selectively moved out according to a phosphorus sludge settlement amount in each phosphorus sludge settlement groove and then are transported to a transferring car through a forklift or are directly transported to a phosphorus sludge recycling device for subsequent treatment; and after use, the hollow phosphorus sludge settlement groove is transported back and then is assembled into a system again, and then another full groove is detached and moved, and the process is continuously circulated.